DOSSIER: The New Zealand Emissions Trading Scheme

Published 17:00 on January 1, 2016  /  Last updated at 16:18 on May 24, 2017  /  Conversations, Dossiers  /  No Comments

This dossier features an overview of this intensity-based scheme, its price history, key reforms and regulatory issues. It adds details on the programme’s use of international credits, its forestry loophole and potential to include agriculture. It also features a summary of key elements by the International Carbon Action Partnership (ICAP).

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Summary (ICAP)

ICAPlogoSummary provided by the secretariat of the International Carbon Action Partnership (ICAP), a multilateral forum working on carbon markets. For more information, visit ICAP’s website. Copyright © ICAP and reproduced with permission.


General information:

New Zealand launched its emissions trading scheme (NZ ETS) in 2008, which has since continued to evolve to cover all sectors of the economy, including agriculture that currently has reporting but not surrender obligations. The first statutory review of the NZ ETS was completed in 2011 and a second review is currently underway. Although, the NZ ETS was originally designed with unlimited access to international credits, in June 2015 it was restricted to a domestic-only system. This may change in the future, as access to international markets is a priority indicated in New Zealand’s INDC.

Background information:

Compliance with the NZ ETS is mandatory for entities of covered sectors that fall within the inclusion threshold.

The NZ ETS has no fixed cap, in order to accommodate carbon sequestration from forestry activities.

Total emissions and proportion covered:81.1 MtCO2e (2014) (51%) Liable entities:2,423 (2015) Sector Coverage:Upstream: buildings, domestic aviation, transport

Downstream: Industry, power, waste, forestry

Gas coverage:CO2, CH4, N2O, SF6, HFCs & PFCs Allocation: Free allocation & auctioning1 Offsets & credits:Domestic


Note: 1In 2012, the NZ government amended the regulation to allow for auctioning of NZUs, however, auctioning is yet to take place.

Phases & Compliance periods:

For most sectors the NZ ETS has year-on-year allocations and surrender obligations.

Temporal Flexibility

Unlimited banking is allowed.

Borrowing is not allowed.


Provisions for price management:

Temporary transitional measures were implemented in 2009 to help firms adjust to a carbon price signal. These include: (a) one-for-two surrender obligation for non-forestry sectors (one allowance may be surrendered for every two tons of emissions) that will gradually increase to full surrender obligations by 1 January 2019; and (b) a NZD 25 fixed price option (EUR 16.32), which effectively acts as a price ceiling.

For further information, visit the ICAP ETS Map.



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